AlphaRank Merger & SPAC Monitor – The Ticking Fee

Ticking fees compensate target shareholders for the opportunity cost and regulatory risk of waiting for a merger to close.

• In a merger, a ticking fee is a cash amount accruing daily or monthly while the transaction remains open; it raises the target consideration and the acquiror’s cost, but pays nothing if the deal is terminated.
• Paramount Skydance prevailed over Netflix in acquiring Warner Bros. Discovery under a definitive agreement signed on December 8, 2025, initially expected to close in the third quarter of 2026.
• The agreement provides $31.00 in cash per WBD share plus $0.25 per share for each 90-calendar-day period, accruing daily after September 30, 2026, at $0.00277778 per day.
• If the transaction remained open after September 30, the fee would cost PSKY $7 million per day and represents a 3.2% annualized yield relative to the $31.00 cash consideration.
• The deal had been outstanding for 293 days, but settlement of a lawsuit by state attorneys general removed a major obstacle, and PSKY expected completion in early to mid-October.

Takeaway: The fee provides WBD shareholders with a small additional return for delay while encouraging timely completion; investors should still account for the risk that regulatory or legal issues extend the closing timeline.